By Clifford Krauss and Campbell Robertson
New York Times
September 05, 2014

NEW ORLEANS — In the four years since the blowout on the Deepwater Horizon oil rig killed 11 workers and sent millions of barrels of oil gushing into the Gulf of Mexico, BP has spent more than $28 billion on damage claims and cleanup costs, pleaded guilty to criminal charges and emerged a shrunken giant.

But through it all, the company has maintained that it was not chiefly responsible for the accident, and that its contractors in the operation, Halliburton and Transocean, should shoulder as much, if not more, of the blame.

On Thursday, a federal judge here for the first time bluntly rejected those arguments, finding that BP was indeed the primary culprit and that only it had acted with “conscious disregard of known risks.” He added that BP’s “conduct was reckless.”

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By finding that BP was, in legal parlance, grossly negligent in the disaster, and not merely negligent, US District Court Judge Carl J. Barbier opened the possibility of $18 billion in new civil penalties for BP, nearly quadruple the maximum Clean Water Act penalty for simple negligence and far more than the $3.5 billion the company has set aside.

The ruling stands as a milestone in environmental law given that this was the biggest offshore oil spill in American history, legal specialists said, and serves as a warning for the oil companies that continue to drill in the deep waters of the Gulf of Mexico, where high pressures and temperatures in the wells test the most modern drilling technologies.

“We are pleased,” US Attorney General Eric H. Holder Jr. said of the ruling.

The decision also casts a cloud over BP’s future. Its reputation has already been sullied and important holdings in Russia are at risk because of tensions in Ukraine. In addition to the $28 billion in claim payments and cleanup costs it has paid, BP has been forced to divest itself of more than 10 percent of its oil and gas reserves, along with valuable pipelines and refining facilities to pay claims and increase its profitability. BP shares fell by nearly 6 percent Thursday, closing at $44.89.

In a statement, BP said it “strongly disagrees with the decision” and would immediately appeal to the 5th US Circuit Court of Appeals. BP added that the ruling was “not supported by the evidence at trial,” and that “the law is clear that proving gross negligence is a very high bar that was not met in this case.”

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In a toughly worded 153-page decision, Barbier reconstructed the timeline from the risky decision to drill more deeply before stopping to the hellish final minutes of hissing gas and raining mud, concluding with the deadly fireball that erupted on the night of April 20, 2010.

In a central episode, Barbier highlighted a phone call between a senior BP employee on the rig and an engineer in Houston that took place roughly 40 minutes before the explosion. In the call, the two men discussed the results of a pressure test that should have prompted quick action to prevent an impending blowout. BP did not mention this call in its own investigative report, an omission Barbier found suspicious.

While acknowledging responsibility for the accident, BP had long argued that the blame should be fully shared with Transocean, the owner of the Deepwater Horizon oil rig, and Halliburton, a contractor that oversaw a critical step in closing up the well.

While Barbier did find the other companies had acted with negligence, he concluded that only BP, which leased the well and was in charge of the operation, was grossly negligent. He apportioned 67 percent of the blame for the spill to BP, 30 percent to Transocean, and 3 percent to Halliburton.

BP has already pleaded guilty to manslaughter and other charges and agreed to pay $4 billion in federal criminal penalties. But the company’s ultimate civil liability is far from determined.

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In 2012, BP reached a settlement with many of the individual and business plaintiffs but has battled in court over interpretations of that settlement ever since. Last month the company requested that the Supreme Court support its reading of the settlement after a federal Appeals Court rejected that argument in May.

BP’s ‘conduct was reckless.’

US District Court Judge Carl J. Barbier

The leaders of a group of lawyers representing the damage claimants, James P. Roy and Stephen J. Herman, reacted to Thursday’s ruling in a statement, saying, “The court has now laid bare the full extent of the level of BP’s misconduct.”

Officials from states along the gulf welcomed Thursday’s decision as ammunition for their own damage lawsuits.

The ruling only pertains to the first phase of a federal civil trial, concerning the responsibility of the blowout itself. Barbier still must rule on how much oil was spilled in the accident, the subject of a trial that took place in the fall of last year. A third phase, scheduled to start in January, will lead to a final determination of penalties under the Clean Water Act.